A) How will the farmers use the money you give them?
[Mandar] Each hosted profile on 30df has a description that clearly states the purpose of requiring a loan. So, some farmers would use it for irrigating land, some for buying seeds, some for starting a dairy etc
B) How does the money reach them?
[Mandar] Every month end we transfer the funds to our MFI partner’s bank account via Paypal wire transfer. We are making our first disbursement on Nov 30 (end of this month). Our MFI partner has loan officers who work for them. These loan officers get money from the MFI Bank A/c and then personally hand it over to the beneficiaries. The loan officer keeps track of every beneficiary via a printed form (date of disbursement, date of return, monthly amount paid paid, outstanding principal + interest etc) Loan officers collect bank loans from farmers on a monthly basis and then they will update a spreadsheet with the data. We will get the spreadsheet to audit. So, we will be able to keep track of your investment. Currently, we are developing this back end functionality (integration of paper based loan forms, excel spreadsheets, MFI database, 30df database). Once this integration is complete (hopefully by December 2009), we will be able to provide a deeper level of transparency to our investor.
C) Why do I see same amount for most of the farmers?
[Mandar] Most farmers get the same amount of loans (decided by our MFI partner) – This is because our MFI partner needs to simplify management of their funds disbursement and interest rate calculation. Its weird, but thats something our MFI partner decides, not us. We just host their profiles.
[Snehal] You must also understand the Self Help Group (SHG) model that micro finance institutes follow. SHG is a group of women who work together and take group ownership of the loan and makes sure that the woman who have taken a loan from MFI does return money on time. (This is one of the reason why the repayment rate is so high in micro finance industry). Now, MFI usually lend funds to the entire SHG and the loans more that often gets disbursed equally among the members of SHGs. This is the reason why you see same amount for many profiles on the website – because they belong to same SHG.
D) Will the farmers use money for the purpose they want or spend it in other ways ?
[Mandar] Nice question. May be farmers can get themselves drunk with the $’s we give them. But we have a better solution. If you look at the profiles hosted on 30df.org, you would realize that all our beneficiaries are women. Women are better suited to being small entrepreneurs, since they are better at running the financial show for their house + they will not squander our money. That was our basic premise to choose a good MFI partner. Hopefully, their husbands dont beat them up and run away with the funds. This is a major risk we have, but we have to live with it, considering our grass root involvement and the level of corruption, male dominance in a regional driven Indian society.
[Snehal] And history tells that empowering a women is best way to empower a family.
E) Instead of money be can provide them with such irrigation equipment which they can use for long term?
[Mandar] Nice idea. But our business model works on financial investment for now. Supply Chain and Logistics do not exist in India. Did you hear that before from someone 
Lets see. Currently focused on solidifying the financial model before we dive into anything else. This itself will take a complete year (full cycle of investment & return). I want to get this right before we dabble into anything else.
[Snehal] The premise on which the concept micro finance works and survives is that the fundamental problem is not so much of unaffordable loans as providing an easy and continuous access to credit itself. In simplistic terms, if we restrict ourselves in giving only say irrigation pumps, how impactful are we going to be!! Just think – having access to constant credit for informal, small and low income businesses; this luxury was never there for poor farmers. Micro finance makes it possible and 30df wants to help!
–Mandar & Snehal,
30 $ F (www.30df.org)
